Symbian Induces Smart-Phone Envy

Opinion: A visit with Symbian, the Microsoft of global smart phones, shows how the FCC's decisions in favor of greedy U.S. carriers made the United States a backwater of wireless telecom.

Most people have never heard of Symbian. But if you own a high-end smart phone that doesnt have a Palm or Microsoft operating-system label, it almost surely has a Symbian OS inside. So, let me introduce you to Symbian and talk about why so little of its product is available here.

For the introduction, let me sit you down at the big table in uberanalyst Rob Enderles den. Whenever a company comes to San Jose, Calif., as Symbian did on this occasion, Robs den is a routine stop.

Id been wanting to visit with Symbian for a while. This week, since they were meeting with Rob and hes a friend, I got to sit in on their briefing to him. And all it cost me, besides gasoline, was lunch for Rob at a pretty good taco place down hill from his house.

(Note to self: Become a successful analyst and buy a house like Robs).

Rob was expecting a Symbian delegation and so was surprised when Peter Bancroft, a likable Brit who serves as the companys vice president of market communications, arrived alone. Well, almost alone, as Peter brought with him a bag of tricks that included about a dozen Symbian-based smart phones from companies like Nokia, Siemens, Sony-Ericsson, Panasonic and Fujitsu.

At this point, I should explain that Symbian is an operating systems developer thats privately owned by a group composed of Nokia, Sony-Ericsson Mobile Communications, Panasonic, Siemens and Samsung. The company grew out of Psion, the pioneering PDA company, which recently sold its 31 percent share of Symbian to Nokia.

Current Symbian-based phones include just about every cool phone that isnt a Treo or a Microsoft Smart Phone, and thats a whole bunch. While Americans pay attention to Microsoft and Treo, the rest of the world really doesnt. As proof, Symbians site lists more than two dozen current or forthcoming models.

Bancroft had a half-dozen of these with him, but as far as I could tell, none of the demo units would actually work in the United States because of network compatibility issues. Many had Japanese user interfaces, and several never powered up because none of us could figure out how to turn them on.

Bancroft said the hottest phones in the world today are found in the Japanese and other Asian markets, with Europe second and America a quite distant third. The Treo 600 thats considered todays "hot" American phone has sold fewer than a half-million units (many fewer, he says) while Microsofts global sales are about 1 million handsets.

The run rate for Symbian-based phones is about 15 million devices a year right now, doubling annually. At that rate, Bancroft predicted that Symbian will break even in little more than a year, based on an annual budget of $185 million and royalty payments of about $6 per phone.

Key to increasing unit volume will be making Symbian smart phones less expensive to manufacture. Todays hardware has a BOM (bill-of-materials) of about $130, which is why smart phones remain expensive.

New technology should soon push the parts cost down to $70 to $80 a phone, necessary to hit the 30 million annual units Symbian needs its partners to sell in order for the company to be profitable selling the OS.

Next Page: Making it big in Japan.